Equifax Acquires Chargeback Management Tool Midigator

Equifax announced at the end of last month that it would acquire chargeback management tool Midigator for an undisclosed sum. Market rumors place the size of the deal in the vicinity of $250 million. If true, that would mean a tidy profit made by Midigator’s investors, who placed an estimated $60 million into the company (including a $30 million growth equity deal in 2018).

The acquisition complements Equifax’s existing anti-fraud solution, which it bought for $640 million in 2021.

According to Equifax, there is strong demand from its clients and for digital identity and fraud prevention solutions that encompass the entire customer journey – both pre and post-transaction. Combining Kount’s pre-authorization capabilities with Midigator’s automated chargeback technology, is anticipated to provide Equifax clients with a comprehensive solution that addresses consumers’ checkout experience while protecting merchants’ revenue.

“The new Equifax is much more than a credit bureau and Midigator expands Equifax’s robust differentiated data assets to bring global businesses the information and solutions they need to better manage fraud across the complete customer lifecycle,” said Mark W. Begor, CEO of Equifax in a statement. “With our Equifax Cloud driven data & analytics capabilities and the powerful combination of Midigator and our Kount Identity & Fraud solutions, Equifax is poised to capitalize on new revenue streams and relationships, broadening our digital identity footprint in a fast growing space.”

Kount determines the trustworthiness of any identity used to create an account, attempt to log in, or make a payment. It allows businesses to fine-tune the level of trust in their systems and select the percentage of transactions that are blocked and transferred to customer service. Doing so allows the solution to lower the percentage of legitimate transactions approved by merchants while still minimizing fraud and chargebacks.

“As digital migration accelerates, managing authentication and online fraud while optimizing the consumer’s experience has become one of our customers’ top challenges,” Equifax CEO Mark Begor said at the time.

The Midigator acquisition is the fourth purchase of a chargeback mitigation company in slightly over a year. Earlier acquisition targets included Chargehound by PayPal, Chargebacks.com by Sift and ChargebackOps by ClearSale.

Interestingly, no suitor has yet lined up to buy the two largest U.S.-based chargeback mitigation companies, Chargebacks911 and Chargeback Gurus. Two possible reasons for this come to mind. First, three of the four companies snapped up (Chargehound, Chargebacks.com and Midigator) were essentially technology companies that provided a chargeback tool that fits well as part of a self-serve SaaS model. The two larger companies are full-service outsourced chargeback solution that are more manual in nature and have a different business model. The second reason is that Chargebacks911 and Chargeback Gurus would possibly draw much higher valuations based on their annual revenues. While exact revenue data for both companies is not publicly available as they are both privately held, knowledgeable market sources estimate that revenue for both is significantly higher than for Midigator, Chargehound, etc.

However, it’s worth qualifying that whether these companies are worth a good deal more may depend in part on their intellectual property and whether they have the technology to compete in an era when chargeback management is moving fast towards increased automation.

What is clear: The demand for chargeback management software is growing.